Just last year we had rates in the low threes. Now we sit with rates in the mid 4's with the 5's just looming over the fence. Not that any rate below even 7 is bad, but the truth is a lot of it has to do with the economy. However a lot of it has to do with the cost to manufacture a loan.
Just three years ago we had three people working in our compliance department. Now, due to the new mortgage rules we have over 50. The cost of those hires is passed on to the consumer through rates. All of the new rules are pretty punitive too. If you make a mistake it can be very costly for a lender. So what happens is that lenders build in a hedge to deal with those mistakes which again raises rates.
On January 1, 2014, today, January 10th, and on January 18th, three new major rules are introduced to bring even more compliance and more costs for mistakes.
Guess what....the cost of every new rule gets passed on to the consumer.
The Consumer Financial Protection Bureau reports to no one. Just like the Federal Reserve, and as a result has no oversight. They create rules upon their discretion.
I'm very excited about 2014. However, when I talk to consumers, I tell them that the government is making things more expensive for them. If the government would just prosecute the criminals we wouldn't have new rules for the rule followers to follow. The criminals will still commit crimes, but more rules just mean more expensive mortgages for consumers.
With all this talk about making things better for the consumer the government just continues to be government and just keeps making things worse...in spite of themselves.